How we survived 2020

Hawkers sell masks at Lights Stage in Mombasa. [Kelvin Karani, Standard]

“Hustle and break things” is a phrase often used to describe the startup life but it quickly acquired a new meaning in 2020. With a pandemic, businesses were depressed, thousands lost their lives, startups were shattered and working from home become a necessity rather than a luxury. It is in these dire situations that some businesses survived, some even thrived, thanks to resilience, adaptation and a little luck. Hustle did a round-up of five such businesses and what they did to stay afloat.

People still bought watches 

Sammy Thiong’o was worried his watch company will not make it through the pandemic, watches being a luxury good.

“I was surprised that the business was so good. Before the pandemic, I made about 30 sales a day. Compared to other businesses, I knew sales would be low. But I dropped to sales of about just 25-20 pieces a day,” says Thiong’o.

Thiong’o is the founder and CEO of online store Retrocasio. It deals with, as the name suggests, vintage Casio watches. He says the business being so niche is one of the core reasons it made it through a hard time.

“I wanted to specialise in one thing and build a business around it,” he adds, “I don’t outsource marketing. I learned to do it on the job through trial and error.”

He reckons that he didn’t thrive; he survived, especially towards the last quarter of the year in October when the taxman imposed heavy taxes on imports, essentially crippling his business. His orders dropped to 10 pieces a day as he tried to get rid of dead stock.

However, despite the few challenges, he finds himself optimistic in the New Year. “This year I intend to open a new physical location. I want my clients to be able to see what they buy. I also plan to set up a ‘lipa-pole-pole’ payment plan. I have in the past allowed for instalment payments but they have been largely off the books, and I have lost a deal of cash,” he says.

 We changed strategy when the pandemic hit

Retail-tech startup Tanda, has since its inception in 2018, been on an upward trajectory. They even raised a seed round of funding from South African VC firm HAVAÍC at the beginning of the year. Tanda offers micro-retailers (dukas) access to inventory credit and transforms them into access points for essential services such as Airtime, Utility payments, M-banking and insurance for their customers.

But a few weeks into the pandemic, small businesses shut down while others downsized and laid off staff.

“We saw the largest decline on record, and it affected nearly all industries but especially medium and small enterprises. This trend was definitely very shocking and we genuinely feared that we would also fall victim to this wave,” says Tanda CEO Geoffrey Mulei.

He had to devise new approaches to stay afloat. “Our platform has thousands of small informal dukas that rely on us to boost their earnings and get loans for their business. It is here that we saw a unique opportunity to enable them to accept digital contactless payments eg. MPesa and Masterpass because of the increasing risk of handling cash,” says Mulei.

Tanda Africa thus adopted this and two more revenue streams born from Covid-related opportunities.

 “Furthermore, we accelerated digital marketing efforts and switched from exclusive face-to-face selling and combined it with telesales in response to government directives on social distancing,” adds Mulei.

Despite the challenges of uncertainty, he is quick to note that his business was better-placed since it deals exclusively in digital and financial services. Not only that, but they also realised accelerated growth in sales compared to pre-pandemic performance.

“At the end of the year, we recorded growth in monthly sales of over 10 times that of January. Earnings in 2020 were four times that of 2019,” says Mulei.

 The company has taken full advantage of this great momentum and push towards digital financial services and contactless payments to position themselves as a leading provider of digital financial services.

 Somehow, we turned a bigger profit

On face value, CDI Gadgets looks like a regular electronics company selling all sorts of Sounds and Lighting (SAL) gadgets from tripods to microphones and even podcasting studio sets. But the company’s main business is actually training other businesses and especially SMEs on how to create content for their websites.

“At the beginning of the pandemic, everyone wanted to be a content creator. The whole world was going digital so we were perfectly placed to tend to that need,” says Gideon Riungu, founder of CDI Gadgets.

A few months later, things began to slow down as people got used to the idea that the Covid pandemic was the new normal. Most people lost their income so buying electronics was no longer a priority.

“I can say for me; I am happy to have survived. I doubt there is any company that truly thrived because money was short for everyone,” says Riungu. The business grossed a profit of 122 per cent in the year 2020.

He had planned at the start of the year to do more business training but that required lots of travel which was no longer possible due to travel restrictions. He is however optimistic that in this year, travel restrictions will ease, allowing him to finally get the business back on track.

To stay afloat, Riungu says he had to have ‘intimate talks’ with his employees to get through to the other side.

“We had to cut down on visits as well as costs. We spoke with the employees on reduced salaries and lunches to make sure they understood our position. Many agreed because three-quarters pay is better than no pay at all,” adds Riungu.

Mwendwa, his co-founder who keeps the books, says the 2020 revenue vis-à-vis that in 2019 was a 69 per cent jump.

We switched products

No company made masks in high production at the beginning of 2020 but as soon as the pandemic hit, it becomes a popular choice for new entrepreneurs. There was a high demand for high quality and sometimes creative ‘Kitenge’ patterns to wear.

A good example is Kitui-based KICOTEC Company. It used to be an embroidery outfit stitching uniforms that pivoted it and redirected all of its cloth inventory to masks.

Operated by Kitui County Government, KICOTEC was among those identified by the government to provide the much-needed masks and PPEs. Making that move to making masks very early into the pandemic earned the company a lot of recognition both nationally and internationally, and appearing on The Washington Post, The Guardian and Al-Jazeera among others.

And they are not alone. By April 2020, seven companies were ready to produce non-woven polypropylene for manufacturing of protective masks and personal protective equipment (PPE).

The workers went from making gardening clothes and uniforms to about 30, 000 masks a day, earning about Sh20, 000 a month.

 

We switched from operations to strengthening systems

Khweva started off as a performing arts organisation, putting up theatrical stage plays/musicals since January 2017 to engage all the senses and bring out all the emotions through acting, dance and live music.

Covid-19 shook up their whole business model, forcing the company to adapt dramatically. They had toyed with the idea of becoming a recording studio space for years prior and were financially planning for the new product. But with the fast change, they had to immediately start setting up.

“An entire line-up of shows and performances were instantly dropped but it was also the perfect opportunity to make the jump to recording. We spend most of the year spreading the word, building relations and essentially setting up the structure for the business,” says founder Calvin Ombogo.

Khweva offers full service of studio time and editing for about Sh3,000 for hour-long sessions, and Sh 2,000 for half an hour or less.

It seemed that studio sessions would be more in demand as more people got time to explore their creative interests but Ombogo says such information is only true anecdotally.

“I have found out that there were more interest and definitely more time. But as people consulted and saw how much time and resources were required, they had to step back. What I have more of is more of the same people spending more time,” adds Ombogo

Looking forward to the year 2021, he says he and his co-founders are focusing on streamlining the system and doubling down on this business.